January 10, 2013 / 5:28 AM / 5 years ago

Iron ore steady at 15-month high; China imports hit record

* China Dec iron ore imports top 70 mln T
    * But some buyers hesitating after rapid rise in prices
    * Australia's first cyclone this year intensifying

    By Manolo Serapio Jr
    SINGAPORE, Jan 10 (Reuters) - Iron ore stayed at 15-month
highs, backed by tight supplies of spot cargoes and firm Chinese
demand, although some buyers are starting to step back from the
market following a recent rapid rise in prices that have lifted
their costs.
    Iron ore prices have jumped more than 80 percent from
three-year lows in September following a revival in demand from
top buyer China whose monthly imports topped 70 million tonnes
for the first time in December.
    China imported 70.94 million tonnes of iron ore last month,
bringing purchases to a record 743.6 million tonnes for all of
2012, customs data showed. 
    The fall in iron ore prices during the third quarter
triggered a return of Chinese buyers into the market, said Nick
Trevethan, senior commodity strategist at Australia and New
Zealand Bank.
    "I think it's very opportunistic in terms of the price
action, and also partly reflects greater confidence in the
Chinese economy, given improving data," Trevethan said.
    "We might see some strength continuing into January as well
but not at the same tempo as in December."
    Benchmark 62 percent grade iron ore .IO62-CNI=SI steadied
at $158.50 a tonne on Wednesday, which was the highest since
Oct. 13, 2011, based on data from information provider Steel
Index.
    Price offers for imported iron ore cargoes in China were
little changed on Thursday, indicating buying interest has eased
following a rally that has seen prices jump by more than a third
since early December.
    
    'TOO EXPENSIVE'
    "It is too expensive for steel mills to restock at the
current prices now and I think the restocking of imported
cargoes will ease a bit," said an iron ore trader in
northeastern China.
    A tender for 75,000 tonnes of 64.5 percent grade South
African iron ore concentrate was cancelled on Wednesday, said a
trader in Singapore, who added it may be due to weak bids.
    "Since prices are nearing $160 and everyone is well aware
that the market is overbought, any negative news would cause
prices to fall again. We could see a correction," the Singapore
trader said.
    But a possible disruption in shipments from top iron ore
exporter Australia where the first cyclone of the country's
storm season is intensifying, could keep spot prices supported.
    Fortescue Metals Group, Australia's third-largest
iron ore miner, said its mines and port operations were running
as usual but it was monitoring the progress of Cyclone Narelle
as it bore down on Australia's west coast. 
    Restrained Australian shipments, slower iron ore output in
China due to cold weather and a pickup in Chinese steel demand
may keep Beijing's iron ore import appetite strong, and with it
global prices.
    "Some people are warning of a big correction in iron ore
prices, but we think demand is going to remain quite solid going
forward because of recovering steel demand and new steel
capacity coming onstream," said Henry Liu, analyst at Mirae
Asset Securities.    
        
  Shanghai rebar futures and iron ore indexes at 0437 GMT
                                                                                    
  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY3                   4018    +20.00        +0.50
                                          
  THE STEEL INDEX 62 PCT INDEX     158.5     +0.00        +0.00
  METAL BULLETIN INDEX            159.04     -0.47        -0.29
                                                                                    
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 
 (Additional reporting by Ruby Lian in Shanghai; Editing by
Muralikumar Anantharaman)

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